Catalyst converter, the bull isn’t quitting, whiny poor and what gold is saying

By Barbara Kollmeyer

Reuters

Perhaps the only people who aren’t sick of the snow: The U.S. trio who swept the slopestyle skiing medals in Sochi.

After a four-win streak, Wall Street backpedaled a bit on Wednesday and Thursday’s session is looking a bit droopy as well. A huge storm is blowing into the Northeast after pummeling the South, and Yellen is taking a snow day because of it. About the only thing anyone is excited about is a blowout cable deal.

Many say the markets are just fatigued and lacking a catalyst, which they clearly haven’t found much of in the last two sessions.

However, this bull ain’t for quitting, says Kurt Fueurman at Alliance Bernstein on Pragmatic Capitalism, who maintains that market stamina is one thing he’s definitely not worried about. He takes the talk about a “bubbly market” to task, saying it doesn’t make a a lot of sense when you look at the price/earnings multiple for the S&P 500 at the end of last year — around 16 times, he says. Maybe that’s higher than it was two or three years ago, but it still shows stock valuations are modest and much lower than in 2000, he says. (Not that anyone has forgotten what happened in 2000.) See chart of the day below for more.

Still, be alert for wild days. Larry Fink, CEO of BlackRock told Charlie Rose a couple of days ago that he sees a higher market overall by year’s end, but says investors have to brace for more volatility this year and what he calls a “hairier market.”

“We had a tremendous rally since 2009. Markets have more than doubled in 2013. Markets were up over 30% and entered 2014 with an elevated market and needed a correction, so many investors expected the momentum would automatically carry into 2014 and these were just false expectations.” Listen to the whole interview here.

One not giving up on the correction theme is Rockwell Global Capital’s Peter Cardillo, who says while the market has turned the corner on hopes of improving economic activity, “the full cycle of a corrective stage is still in progress, even in the presence of a strong turnaround.” Sit tight and buy on a new trend heading south that could take the S&P 500
/quotes/zigman/3870025/realtimeSPX back towards 1700 to 1720, he advises.

The economy: That catalyst markets are looking for could come at 8:30 a.m. Eastern. Did shoppers turn their backs on retailers in January? We’ll find out at 8:30 a.m. when retail sales for January is released, with economists expecting a 0.1% dip for the month owing to those pesky polar vortexes and a bit of a post-holiday hangover. But economists assure that even if this number isn’t so great, it doesn’t bode horribly for the rest of the year. Read the preview

Also at 8:30 a.m., weekly jobless claims are due, and the number of people applying for jobless benefits is seen falling slightly to 330,000 from 331,000 in the prior week. Business inventories for December are coming at 10 a.m. Eastern.

What we’re not getting Thursday is another round of testimony from Fed Chairwoman Janet Yellen due to the arrival of a major winter storm that’s been pummeling the South. Government offices in D.C. will be closed on Thursday as everyone hunkers down.

The chart of the day: AllianceBernstein’s Feuerman highlights this chart to back up his view that equity valuations are not out of bounds. Add that to interest rates that he thinks will rise gradually, and this bull market won’t run out of steam, he says.

Bloomberg, S&P, Alliance Bernstein

Other positives: relative valuations, equity demand and wealth and deleveraging. Read the full blog here.

The call of the day: What’s gold got to do with it? After a 28% slump last year, gold prices have recovered 7%, and the shiny stuff has gained even when stocks have been recovering. Kelly Teoh, market strategist at IG, says this is telling us that “perhaps investors are not entirely convinced by the recovery in the equity market and there is a change in the view of risk.” Given the view that markets will be choppy for the rest of the year, she says it’s onward and upward for gold this year.

“There are various reasons why gold prices are supported such as the weak U.S. data, the Fed’s stimulus and the low interest rates. These supportive reasons can quickly become headwinds as the U.S. economy growth is likely to continue to improve and the Fed’s reduction of stimulus is maintained. However, a gradual U.S. recovery is unlikely to be smooth sailing…”

It’s war on the poor, and the latest to open his big trap is Nicole Miller’s CEO Bud Konheim, who says $30K a year is a great salary in India, so Americans should stop whining (to disappointingly thunderous applause from CNBC’s Joe Kernen.) For a family of four with two children, the poverty level is $23,283, so in other words, all you borderline folks out there have plenty of change for this rag at Nicole Miller. Twitter is showing no mercy to silver-spoon Bud:

On that note, Fox News claims the dress Michelle Obama wore to dine with that swinging single Francois Hollande costs more than the the annual U.S. poverty level.

Mark your calendars. Chick-fil-A says in five years, burgers will be antibiotics-free.

The ice storm cometh and some familiar scenes, though this time not in Atlanta, where everyone stayed home.

Remember, your performance will be seen by other women on Valentine’s Day. That and more tips on how to survive Valentine’s Day from the unofficial Goldman Sachs guide to the big day.

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